The Green Party is calling for further increases to the minimum wage and benefits to move them to "liveable levels".
The Government announced in February the minimum wage will increase from $20 per hour to $21.20 per hour, which will come into effect from Friday.
But Green Party co-leader Marama Davidson told AM families need a lot more to be lifted out of poverty.
"Unfortunately households and families will need a lot more before they are living with any sort of dignity. Of course we welcome, as we know households will, any extra dollar - we know that is nothing to scoff at but it's a sad state of affairs when any extra dollar is going to go some way," Davidson said.
The Green Party co-leader said "decades of political decisions" have forced some families into poverty and further increases are needed.
"What we want to see are all of those lowest incomes lifted to a minimum level where people are living with dignity. There is absolutely no reason why so many people need to be living in poverty," she told AM.
"Already before COVID, this has been decades of political decisions that has put families and people in this situation. For example, a family with two children actually needs something like $300 more to be able to make ends meet.
"Currently most people are only going to get about $15 per week extra for those who are relying on that extra minimum wage to help get by and that is simply not good enough."
Prime Minister Jacinda Ardern recently accepted New Zealand has a cost of living crisis after previously refusing to do so.
In February, the Government took aim at skyrocketing petrol prices, announcing a fuel tax cut of 25 cents per litre for three months.
It comes as the cost of living skyrockets with Kiwis spending on average an extra $4000 and $5000 in the past 12 months on basics such as food, rent and fuel. The majority of the increase is fuel with an extra $678 a year at the pump on average.
Davidson said without further increases, Friday's improvement to the minimum wage will not make a "smidgin of a difference".
"Specifically for those who have been involved in sometimes intergenerational poverty - children who are born into not knowing anything more than to be struggling, generation after generation for the basics.
"We want to see the amount you can earn lifted, otherwise this minimum wage increase is not going to make a smidgen of a difference.
"When you have got bread, broccoli, milk, tomatoes, eggs just skyrocketing at the moment, then people will not be making enough extra at all."
Watch the full interview above.
